I have seen tweets a few of times from Grover Norquist, the founder of Americans for Tax Reform, saying that: “Government creates wealth the way ticks create blood.” It’s a great tweet, admittedly, even if it is dead wrong. It’s great, of course, because it uses a very stinging and paradoxical metaphor for government. But it is wrong because it mischaracterizes the relationship of government to wealth. A better analogy, though certainly not as stinging, would be: “Government creates wealth, the way the body creates blood.”
Norquist, however, says: “A government is to wealth as a tick is to blood.” The analogy, of course, has a paradox in it. The tick is a parasite and doesn’t create blood at all but instead sucks it from its host. A tick can’t live without a host. The analogy thus implies that a government can’t create wealth but actually sucks it from its host. In this case, the implication is that the host is the people government serves. Government sucks taxes from the people instead of creating wealth.
That perspective on government, of course, is consistent with the views of the libertarian leaning Norquist and many Conservatives. In case you don’t remember, Norquist is the founder of Americans for Tax Reform and the primary promoter of the “Taxpayer Protection Pledge,” a pledged signed by most Republican members of Congress prior to the 2012 elections. Norquist’s aphorism is consistent with his basic philosophy of government and taxes.
But here is why the analogy is wrong. The analogy implies that government does not create wealth at all. But in fact the reverse is true. Wealth cannot be created without government. So, in fact, government creates blood the way the human body creates blood. How so?
A liberal government is in fact a necessary condition for wealth and a good government is one that helps its country produce wealth. Why is government necessary for wealth? Because wealth requires a flourishing economy and a flourishing economy requires a liberal government that establishes a set of rules and regulations that create trust. Look at countries where there is not a stable or trusted government, such as Syria or Iraq, to name a few recent examples. Or look at countries like Mexico where corruption undermines the effectiveness of a stable economy. These countries can’t create wealth easily because they don’t have enough basic security and predictability to create stable commerce and markets. A flourishing market requires a stable, reliable government.
Norquist and his ilk hide this potent and important fact about government. Liberal governments are in fact the foundation of markets, ensuring there is enough social stability to make contracts trustworthy. Without stable governments that enforce laws, one does not engage in commerce because one does not trust that contracts will be enforced. Government is the guarantor of the security of the contract and commerce. Government creates the foundation on which commerce can flourish. This is why early modern natural rights philosophers, who influenced our founders, pointed to the creation of the binding contract as the foundation for social life itself. Contracts require the presence of a binding law that is enforceable, and thus markets themselves rest on the security of the contract, which in turn rests on the presence of a stable state.
So does government create wealth like a tick creates blood? Clearly the aphorism is misleading in a profound way. Get rid of the tick and the host still produces blood. Not so if you get rid of government. Get rid of government and you destroy the foundation of wealth. A better analogy would thus be this: A government produces wealth the way a human body creates blood. Government is a necessary condition for the production of wealth, the way the body is necessary for the creation of blood. Other factors may affect the production of blood too. But without the body you have no blood at all. And without taxes you have no body to produce blood at all.